The megamall is bustling with shoppers at noon when two Pakistani men — dark-skinned with black beards, wearing white skullcaps and the traditional salwar kameez of the subcontinent — drop their bags near a third-floor sporting-goods shop. They remove their leather sandals, place their safari vests on the floor, and prostrate themselves toward Mecca, thousands of miles away.
"Allahu Akbar," they murmur. "Ashadu an la ilaha ill Allah ..."
The devout Pakistanis are facing west, not east. In fact, they're in the Far East — in Yiwu, a boomtown of 2.2 million in China's Zhejiang Province, 200 miles southwest of Shanghai.
Hanging from skylights above them are two banners emblazoned with propaganda meant to inspire the masses: FACE THE WORLD, SERVE THE COUNTRY AND ASSEMBLE COMMODITIES FAR AND NEAR, MAKE FRIENDS AT HOME AND ABROAD.
Their ad-hoc prayer hall is Yiwu's International Trade Mart. In the summer of 1982, just as China was opening to capitalism, the local government allocated land on the rural town's outskirts for an open-air market. What began as a cluster of street vendors has transmogrified into the Trade Mart, the world's largest small-commodities market: a chain of warehouses that opened in 2002 and now spans more than 988 acres — large enough to fit 10 Malls of America.
If China is the world's factory, then Yiwu is its showroom. Balloons made in Guangzhou, teacups fired in Jingdezhen, and slippers sewn in Pinghu — they're all on display in Yiwu, so traders can browse and haggle without having to schlep across the country to scope out different factories. Yiwu has made commerce convenient, particularly for Muslim buyers from the Middle East and beyond.
The entrance of the vast Trade Mart is designed to impress. Near the main doors, set amid a glass cube, a towering sign gives a vague sense of what lies within. District No. 1 sells fake flowers, jewelry, and crafts. Luggage, clocks, small appliances, and rain gear are in district No. 2. Need stationery, sports equipment, or zippers? Head to No. 3. District No. 4 holds bras, knitted belts, and yarn. But that's not nearly all.
Imagine a fortress converted into a convention center turned into a bazaar, with fewer windows. Inside, past a fleet of ATMs and up the escalator, are 62,000 stalls selling some 410,000 products. The buzz of fluorescent lights is drowned out by the noise of thousands of conversations in Mandarin, Arabic, Swahili, Spanish, Hindi, Russian, Farsi, English, and the local Yiwu dialect. Tweezers, sink faucets, power strips, coffee mugs, and hammers fill row after row of booths, each about the size of a prison cell. Suits of armor are on the top floor, next to patio furniture and artificial fireplaces. Toys are below. In the footbridges that link the districts, entrepreneurs have set up banks of pleather massage chairs. Vending machines spit out shrink-wrapped dress shirts for those needing a quick wardrobe change.
Upstairs, night-lights glow in the form of gingerbread houses. There are clown wigs, solar panels, vases, and razors. Trademark infringement abounds: Display cases are lined with fake iPhones, racks of knockoff Gucci purses, and piles of Polo suitcases. SpongeBob dolls droop beside enough Toy Story cowboys to make Disney executives cry. Glow sticks are tucked near a stairwell that leads up to a hall filled with religious kitsch: Jesus bobblehead dolls, paintings of the Dalai Lama, crucifixes, and Santa Claus lamps. The array of products aimed at Muslim consumers appeals to the pious and the heretic. Stalls sell hijabs, prayer rugs, electronic Korans, Mecca devotional paintings, and fake virginity kits, which leak red liquid when ripped.
Traders place wholesale orders after viewing these goods on display at the Trade Mart. Most of the merchandise is destined for shelves in developing countries where quality standards are lower than in more sophisticated North American and European markets. But while traders come in search of bargains, their bulk business has made Yiwu rich: In 2010, the developing world accounted for more than half of the city's $2.86 billion in exports, an increase of 34% from 2009. Last year, China surpassed the U.S. as the No. 1 exporter to the Middle East and was the region's biggest buyer of oil, importing more than one-tenth of the Gulf states' crude, as well as 23% of Iran's.
As both seller and buyer to the Middle East, China's influence is being felt by everyone from sheiks to bakers. "China has made it affordable for the average Arab household to buy once-expensive consumer goods," says Ben Simpfendorfer, author of The New Silk Road: How a Rising Arab World Is Turning Away From the West and Rediscovering China. The impact of this trade is not on policy makers' radar, but it should be, he says. "The global economy isn't driven only by big-ticket deals, such as billion-dollar Boeing sales negotiated between a handful of senior executives. The individual traders and small-time entrepreneurs in the emerging economies are equally important."
According to local lore, Yemeni merchants discovered Yiwu a decade ago and returned to the Gulf laden with cheap goods and tales of quick deals, which soon spread across the Arab world and beyond. Today, 200,000 Middle Eastern traders make the trek to Yiwu every year, along with Pakistanis, Indonesians, and Malaysians. Chinese Muslims have, in turn, settled in this city to work as translators and middlemen, sharing prayer rugs and profits in a modern reenactment of the Silk Road, but with cell phones instead of camels.
Yiwu is a city of no historical significance and even less glamour. Lonely Planet ignores it entirely. The millions of people from across the globe who descend here each year are not tourists looking for ancient palaces. Since its opening, the Trade Mart has expanded three times, and the influx of Middle Eastern traders has been a major factor in the city's growth. After China was admitted to the World Trade Organization, in 2001, droves of Arabs, Iranians, and Pakistanis descended on Yiwu in the years that followed, drawn to the one-stop shop established by the local government. Hundreds of Middle Eastern trading companies put down stakes, and Chinese factories flocked to the megamall where they could rent space to showcase their wares. "Even as the Mideast's demand started to surge, especially after the post-2004 surge in oil prices, Arabs found it very difficult to visit the West. It helped that China both relaxed visa restrictions and started selling goods at a much cheaper price than either Europe or the U.S.," says Simpfendorfer.
Yiwu's success in many ways symbolizes China's rise from a centrally planned economy to the capitalist superpower that replaced the United States this year as the world's top manufacturer. The Chinese government, intimately involved in every aspect of the city's commercial landscape, is so proud of Yiwu's lucrative plan that it is even exporting the Trade Mart model. In January, construction began in Bangkok on a replica of the Yiwu market, called the China City Complex, to house 70,000 Chinese tenants selling China-made goods.
Yiwu's megamall does have its detractors. In March, the Office of the U.S. Trade Representative included the Trade Mart on its list of "notorious markets" for rampant copyright infringement. A USTR official noted that it is known "in industry circles for counterfeits of all types."
Despite the fakes, the city has become a magnet for merchants like Mohammad Mahmoud, a toy salesman who fled Baghdad for Dubai in 2005, when he could no longer escape the chaos of the Iraq war. First his brother was kidnapped. His wife's cousins were next. Mahmoud paid a hefty ransom, but their corpses were found in the street, shot in the head execution-style.
Iraq is not as violent these days, so Mahmoud makes trips back a few times a year to sell toys. He used to order his China-made goods from Dubai, but Yiwu now is his preferred source because he gets better deals there. "Iraqis just want cheap, not quality, and I need to make a profit," he says one afternoon at the Trade Market, his orange sacks stuffed with dolls, knockoff Lego sets, and water guns. "Every year Yiwu is getting bigger, and the Chinese understand what we do. Arabs can do business here, no problem."
The influx of Yiwu-bound traders from the Arab world has lured thousands of non-Muslim-Chinese entrepreneurs, hungry to cash in on this growing niche market, to work as translators, middlemen, and suppliers of the traditional goods which make up Muslim daily life.
Jiang Feng, a 25-year-old from Huzhou, a city three hours north, went his whole childhood without meeting a Middle Easterner; now the faraway region is a cornerstone of his business. When Jiang was a teenager, Middle Eastern traders began coming to his city with samples of kaffiyehs, looking for locals to manufacture the traditional scarves, so his family started a kaffiyeh factory in their home. Last October, Jiang opened a store in Yiwu, hoping to be closer to the action. The shop is a veritable Arab haberdashery. Delicate cotton kaffiyehs are draped neatly in rows along the walls. Flowing white thawb robes, ubiquitous in the Persian Gulf, hang from racks next to khaki jallabiyas preferred by the men of North Africa. Religion is not something he has in common with his buyers, but Jiang understands the need to get the designs right. "Our customers' faith and what they wear are very connected, so we can't make mistakes," he says.
The impact of the Middle East trade registers across Yiwu; you can see it all over the streets of this New Silk Road outpost. In the Maida neighborhood, down the street from the Trade Mart, a Muslim enclave has taken root. Hookah cafés line the sidewalks, where Uighurs — a Turkic race of Muslims from China's Xinjiang region in the far northwest — fire up mutton kebabs and vats of golden pilaf. The Arab Street is here in the flesh: Egyptians, Algerians, Iraqis, Saudis, Yemenis, and Syrians. They cut hair, replace shisha coals, and run Arabic language schools.
One night, the Taj Mahal restaurant is overflowing with boisterous Pakistanis in salwar kameez watching the Cricket World Cup. Next door, tables of mustachioed Arabs sit quietly, intent on their backgammon boards. Al Jazeera blares. The air is fragrant with the smoke of mutton and apple-shisha tobacco.
Hesham Wahdain, a 26-year-old Yemenite, mans the counter at an electronics shop across the street. IPhones (fake and real), Muslim prayer clocks, and audio Korans fill the shelves. Last year, Wahdain left his hometown of Hadramut after he was laid off by a cement company. With Yemen's unemployment at 35%, he had no reason to stay. "I went to university for computer science and now I sell phones," he says. For now, Wahdain is content to stay in China. But it pains him that his homeland is unwilling or incapable of copying the China miracle. "We don't even make pens in Yemen. How can we make Koran alarm clocks?"
No place in the city embodies the growth and influence of the Muslim populace in Yiwu more than the local mosque. "We've had to move three times because we keep running out of room," says the imam, Ma Chunzhen, a 36-year-old from Xinjiang who speaks fluent Arabic. When Ma became the local imam 10 years ago, around 60 Pakistani and Arab traders would gather on Fridays in a hotel conference room to pray. Since then, the number of weekly worshippers has grown to 7,000 — 60% of them foreigners — filling a massive, new structure graced by marble columns. A two-story building with ablution fountains looms in back. The complex's funds, Ma says, came entirely from private donors.
Ma is tall with thick hair that he covers with a black fez during the week and a white head scarf on Fridays. He tells foreigners to call him Mohammed. As both an official appointed by the Chinese government and the community's spiritual leader, Ma has duties that go beyond the religious. Over the years, he has explained the intricacies of Chinese tax laws to panicked importers and gained wide respect as a mediator in disputes between traders and suppliers. "People are here to make money, and money makes things complicated," he says.
Ma takes his role as moral compass seriously. On this day, Ma begins the service with an exhortation for the faithful to do business the halal way. It's a common theme for him. As he says later: "Islam has ethical standards that are beneficial for doing business in Yiwu, like honesty and trustworthiness. Poor-quality goods and cheating are prohibited."
Those concerns are paramount for Mohamed Khattab, an Egyptian-American who owns an Islamic-goods store in Falls Church, Virginia. As he tugs on his sneakers after midday prayers, Khattab reflects on the perils of making deals in a business culture that is so identified with corruption.
Yiwu's trade is virtually all wholesale, so the foreign exporters who come to place orders are dependent on those large shipments for their livelihood. When problems with the supply chain in Yiwu arise for people like Khattab, their whole world can collapse. Since first coming in 2009, he has returned to Yiwu seven times, mostly to track down Chinese business partners who have broken their word. This time, Khattab's problem is a $60,000 shipment of hookah parts, tea glasses, and jewelry that he says is being held hostage by a shady network including trading associates who are demanding 110,000 yuan, or $16,800, in bribes. At first, he thought it was an official fee, until his trading agent told him it would be under the table. "How big is the table that you need that much money?" Khattab wonders.
Khattab is no amateur; he has built his store into one of the largest Islamic-product wholesale businesses in the U.S. The shameless lack of ethics of his Chinese partners has come as a shock. To fix the matter of the missing goods, Khattab has teamed up with a fellow Egyptian and the man's Chinese wife, a vital resource for a foreigner. He's been in Yiwu for weeks, renewing his tourist visa and spending thousands of dollars on hotel rooms while his associates plot and delay. All he can do now is wait and pray. "Yiwu is like Vegas," he says with a chuckle. "Businessmen come with dreams of getting rich, but it's a gamble, and to win you have to know how to play the game."
Slideshow: Return to the Silk Road
A version of this article appeared in the July/August 2011 issue of Fast Company magazine.